CHAPTER THREE

INTRODUCTION

2.1 Research Background

Effective operation management is crucial for businesses in order to sustain and

maintain their dominant market position. This is the result of combination of prudent
management and highly competitive spirit with their competitors. It is undeniable that
businesses need to focus on how to maximize their profit while trying their best to
reduce costs. Productivity, cost reduction and quality improvement are part of the
important aspects that play a big role in increasing the efficiency of operation
management in a company. According Caliendo, 2020, productivity relies on how the
firm manage their production activity. Businesses’ owners and managers oversee the
combination of inputs and several other production factors such as the manufacturing
technologies, product demands and the production efficiency for their businesses.
Productivity frequently used to assess efficiency in the production line as
businesses are bound to evolve their manufacturing processes to react to changes in
their supply chains costs [ CITATION Jag13 \l 17417 ] . Therefore, managers need to be in
a fit set to enhance the production activities as the increase of efficiency will also
increase the productivity. Productivity is achievable by reducing the inputs and
keeping the outputs constant or by increasing the output and keeping the inputs
constant, [ CITATION Jay201 \l 17417 ]. Component of input are labours, capital and
management in the production system whereby outputs are the goods produced. It is
obvious that labour productivity improvement will be able to boost employees’
performance by letting the employees to perform their task in a shorter period.
The increased in the productivity leads to the reduction of operational costs hence
also known as operational improvement. The technologies underlying on the idea of
Industry 4.0 carry the objectives of cost savings, versatility, speed and quality
improvement, but more than that, Industry 4.0 provides the ability to dampen the
inherent contradictions between these main organizational objectives [ CITATION
Ols20 \l 17417 ]. Technologies are believed to be able to help in increasing the
productivity and maximize efficiency. Technology transformation in the
manufacturing industry can reduce production time, reduce lead time for
manufacturing, reduce wastages and ensure greater production flexibility as example
3D printing technology has become so productive that manufacturing industry
workers are worried that they will be replaced.

2.2 Background of Industry

Packaging emerged in the 19th century to enable manufacturers and suppliers to

supply their products to stores in a pre-packaged format [ CITATION Gil04 \l 17417 ] .
Packaging technologies enable producers to keep their products fresh and in an
attractive way for merchants to sell. Packaging’s development has been affected over
the centuries by advances in technologies, transportation and societal changes.
Increasingly sophisticated print technologies mean that things that were unachievable
many years ago such as half-tone printing onto certain plastic substrates are now a
common place.
The purpose of packaging includes to protect products from damages, function as
containers and to attract users [ CITATION Gor90 \l 17417 ] . The main function of
packaging is to protect a product. Products need to be protected against elements such
as moisture, odours, micro-organism, dust, physical knocks, vibrations and other
outside elements that may change the form or affect a product. For example, a paper
product that is exposed to moisture or water may swell and will be changed in
appearance or may not function properly. The basic function of packaging is as
container to a product. This container function helps to prevent products from
widespread or polluting areas. For example, flour is packaged in a plastic as to prevent
the flour from contaminating the nearby areas and the air surroundings. Other function
of packaging includes attracting and providing information to customers. Dull and
plain packaging does not provide any information to customers in order to make
decision. For example, a canned food that is plain in colour and do not contain any
information such as ingredients or calories will be troublesome to consumers who are
allergic to certain products or on calorie diet.
Malaysia’s packaging industry is classified into two areas which are plastic based
or non-plastic based [ CITATION Ong17 \l 17417 ]. According Chin (2017), there are a
total of 15 listed companies that are involved in packaging in Malaysia and these
companies generates an annual sale of RM6 billion and half of them were export
sales. In our research study, we will focus more on non-plastic packaging as PT Sdn
Bhd packaging products were mostly paper packaging products. Some of the big
players in the non-plastic packaging industry include Muda Holdings Berhad, Box-
Pak (Malaysia) Berhad, Ornapaper Berhad, Public Packages Holdings Berhad and
Bright Packaging Industry Berhad. The biggest player in this industry is Muda
Holdings Berhad with annual sales of RM1.5 billion in 2019 [ CITATION Mud19 \l 17417
].
Malaysia’s paper packaging industry is growing at 4.5% yearly as shown by Table
1. With the consistent growth of demand and supply of corrugated packaging, the
industry is currently at growth to maturity stage. The threats of new entrant in the
packaging industry is very high due to the process were mostly still done manually
and labour intensive. This was due to the nature that product packages design was
frequently changed to suit custom demand and to remain attractive. Aside from direct
materials, direct labour cost is the second highest contributing cost factor to the
industry. With minimum wage has been increased by 20% since 2018 in Malaysia,
industry players are increasingly investing in ways to reduce cost by means of
reducing waste through leaner operation and through industry automation.

Figure 1: Malaysia corrugated supply vs. demand

Source: Malaysian Corrugated Carton Manufacturers’ Association (MACCMA)

The competitiveness of the industry too are very high as there were more than 20
companies involved in the packaging industry in Malaysia alone [ CITATION Bur20 \l
17417 ]. Paper rolls are the main material used in the production paper packaging
products. There are only a handful of local paper materials suppliers in Malaysia, thus
importing some paper rolls are needed to fulfil demand. Major suppliers of paper rolls
are also producers of corrugated cartons and packages thus making the industry more
competitive as these major players will only distribute excess of papers that are not
being used by their packaging production.
Threats of a substitute for the paper packaging industry is high due to the plastic
packaging that is lesser in weight and a cheaper alternative [ CITATION Woo20 \l
17417 ]. According to [ CITATION Woo20 \l 17417 ] , the plastic packaging industry
accounts for 93% of total consumption as compared to paper packaging which
accounts for 5% of total consumption. It takes about four times higher energy
consumption to produce a paper packaging as compared to plastic packaging
[ CITATION Tom19 \l 17417 ] . Although the fact that paper substitutes are more preferred
due to the lower cost, paper packaging has made a comeback and are now more
preferred by consumers due to it being more environmentally friendly. Paper
packaging can easily be disposed, can be composed naturally and recycled as paper
pulp as compared to plastic packaging that is not easily disposed, cannot be composed
naturally and cannot be recycled.

2.3 Background of Company

PT is a local Malaysian identity company that rich of multi-racial culture. It stands

proud as a modest home-grown business heritage can truly achieve which is a
“Powerhouse Printer”. The modest beginning of PT was supported by 2 offset
machines with a headcount of just 10 local staff, including its Founder and current
Managing Director Jimmy Ong [ CITATION Abo \l 17417 ].
Started as a printing company, PT is passionate in giving life to every products
printing and packaging. Along with a deep-rooted culture of commitment towards
exceptional quality and total customer satisfaction has led them deep into the essence
of packaging excellence, allowing PT to propel further. Equipped with committed
team to ensure every request has been designed to be comprehensive and inclusive,
starting from the right concept to the final production, every step is carefully thought-
through from the point of presentation, usages and its after-life.
PT believes that their role is beyond than providing an outer case for a product.
They believe that besides preserving, protecting and prolonging the shelf life of the
product, packaging is an art form of communication while bringing colour and
excitement into our daily life which truly embodies the vision of “Make Life
Colourful”.
Specialized to cater to customers' specific packaging ideas that fit their needs and
PT creates a holistic solution under one roof, regardless of the industry you are in. It is
also trusted as a company which provides packaging development that is convenient,
easy and safe while providing a wide variety of customization options.
With more than 30 years' experience, PT is confident to be able to produce
products printing and packaging that can meet and even surpass the global standard,
along with much consideration put into the environmental aspect that improves
stronger product value. Committed with strong and high attention to details also helps
them to convince their prospect customer that they serve the best quality of product.
2.4 Problem Statement

The packaging division of PT comprises about 50 production staff and handles

more than 200 different varieties of packaging products. The introduction of new
packaging formats and designs is driven by manufacturers creating new products and
to remain creative as well as attractive. Each driver is spurred by different desires, for
example, a milk carton producer desires to create a package that requires minimum
material and maximum hygiene. Other aspects and challenges include the difficulties
of automation due to many different varieties of packaging boxes, the need to produce
parts efficiently with the lowest number of manpower possible is the main objective of
the department.
Based on Figure 2, output per manpower has been dropping for the last two years
in 2018 and 2019. An operational improvement is needed to improve employee
efficiency of the packaging department of PT. Several operational improvement
activities have been identified to improve the overall efficiency of the department
including automation, process improvement, production layout improvement and lean
operations. With the right method and the right attitude, it is strongly believed that the
operational improvement actions lined up will be able to increase the output per
manpower of the department.
 Figure 2: Monthly output per manpower in 2018, 2019 and 2020

2.5 Objectives

The main objectives of the research include:

1. To conduct a situational analysis on PT’s packaging department.
2. To examine the relationship between elements of improvement actions
towards productivity improvement.
3. To examine the relationship between elements of improvement actions and
cost of implementation.

4. To make recommendations for productivity improvement actions for PT Sdn

Bhd.

2.6 Scope of Study

In any production or manufacturing line, production workers play an important

role. They are the heart of the production system and are the main players to generate
output of a company. They need to put lots of effort, dedication and commitment to
the job for a company to be very productive. However, improvement actions such as
automation, process improvement, production layout improvement and lean operation
will be able to increase the productivity of workers. This study focuses mainly to help
PT to achieve productivity of the employees (Dependent Variable) by involving
productivity improvements which are automation, process improvement, production
layout improvement and lean operation (Independent Variable).
PT has been chosen by us to be the company of choice in which they are one
of the top companies that provide manufacturing packaging services to big
corporations such as electrical & electronics, health and beauty, food,
pharmaceuticals, etc. to manufacture the packaging of their products. PT’s factory is
located at Kepong, Wilayah Persekutuan Kuala Lumpur. The respondents of the study
which are being selected are focused on the production workers of the packaging
department in PT factory.
2.7 Significance of Study

This study provides information associated with factors contributing to

productivity improvement, hence findings from the study will assist managers &
engineers of PT and other organizations in the packaging industry make better
decisions on operational management. It will also help other researchers as a reference
for their studies.

3.7.1.1 Significance to PT Sdn Bhd

This study is important to the company as the outcome can benefit the
company in which the adaptation of productivity improvement such as
implementation usage of automation, process improvement, production layout
improvement and lean operation have strong relationship towards the employees
productivity or not and thus contributing to improving the production of the company.
For the company to get the optimum productivity of their employees, they need to
know which method is really giving a major impact on it.
This research will assist managers and engineers of PT in deciding which
productivity improvement best suits the production workers. The implementation of
productivity improvement will allow PT to maximize its workers productivity thus
maximize their production output.
Furthermore, the most significant and least significant of the productivity
improvement actions taken will assist PT to find which productivity improvement
contributes the most to the workers’ productivity.
3.7.1.2 Significance to Industry

As at today, the industry is considered as the most important industry in the

day-to-day business which involves physical products. Whenever we purchase any
products or look at any product, packaging is always involved. As the industry is in
many segments, finding the productivity improvement towards the production workers
is vital when improving the productivity. Thus, productivity improvement was seen to
be a critical aspect towards the industry's daily business operation in efficient use of
its employees in order to reduce the cost of operation. A successful implementation of
productivity improvement will not only help the company itself, but it also improves
product quality, thus creating a good image towards the customers.

3.7.1.3 Significance to Other Researcher

The study will help other researchers as a reference or benchmark to produce

better results in their research regarding improving productivity of production workers
especially in the packaging industry in Malaysia.

2.8 Limitation of Study

1. COVID-19 caused restrictions to meet with respondents by face to face. Thus,

we are unable to give proper explanations to respondents on terms they might
find difficult to understand.
2. Limited time to have a proper meeting and discussion with management due to
their tight schedule.
3. Company’s reluctant to share and give access to customer information to
protect customer privacy and confidentiality.
4. The study will only respond to production workers (operators) and does not
involve response from executives.
5. The study will only focus on a packaging department instead of the whole
company.
2.9 Definition of Terms

One.9.1.1.1 Automation

Automation lowers the cost and contributes profitability of the company by the use or
implementation in a production or other method or facility of automatic equipment
[ CITATION Ace20 \l 17417 ].
One.9.1.1.2 Process Improvement

Process strategy is the approach of a company to the transformation of assets

into goods and services. Its goal is to develop a process that can deliver deals that
meet cost and other managerial constraints of customer requirements. [ CITATION
Jay201 \l 17417 ].
One.9.1.1.3 Production Layout Improvement

Layout is one of the main elements that contribute to the efficiency of operations in
the long run where organizations are able to get a great strategy that could assist
differentiation, low costs or responses by implying an effective layout [ CITATION
Jay201 \l 17417 ].
One.9.1.1.4 Lean Operation

Lean operation is a management that emphasizes on the continuous identification and

elimination of waste sources by the company so that processes can be enhanced
continuously [ CITATION Nic18 \l 17417 ].
One.9.1.1.5 Productivity

Productivity is used to analyse the operations, where the total production and unit of
the resources are observed [ CITATION Pat19 \l 17417 ].
One.9.1.1.6 Efficiency

Efficiency can be explained by having the same number of goods or services with the
same or less input or using less resources[ CITATION Rok17 \l 1033 ].
 CHAPTER 2
LITERATURE REVIEW

2.10 Introduction

The research area will focus on operational improvement activities to improve

the overall efficiency of the packaging department. The efficiency of the department is
determined through the monthly output over manpower. The operational improvement
activities include automation, process improvement, production layout improvement
and lean operation.
2.11 Concept and definition of Key Components of the Research Area

3.11.1.1 Employee Productivity

The monthly output and the number of manpower are determined from the
company's ERP system where each department output and input (manpower) is being
recorded. From the raw data, we can then derive the productivity measurement which
is the monthly output over manpower. One of the operational improvement activities
to improve the overall productivity of the department is through automation.
Machineries are being used to automate tasks in order to get more output or reduce the
overall cycle time. Process improvement includes overall cycle time and lead time
reduction such as line balancing. Production layout improvement includes
implementing a U-shaped layout to reduce unnecessary movement. Lean operation
includes reducing the seven wastes of transportation, inventory, motion, waiting,
overproduction, over processing and defects.
The employee productivity can be explained by the total units of output
(goods/services) over units of input (man hours) (Mankins, 2017). Productivity is
basically to produce more while with the same effort resources. Performance in
employee productivity is calculated over a specific period by the swing in production
per man hours. Through better employee productivity, with the very same number of
manhours, an organisation can deliver more goods and services.

It is a significant problem to understand the variables that drive employees to

achieve productivity, particularly when they contribute to or are influenced by the
perspective of the employers. Manufacturing firms also insist on uniform processes,
accessible to everyone to increase productivity and cut operational costs [CITATION
deS09 \l 17417 ]. Seeking excellent productivity, employees rather recommend the
manufacturer react to the specific implementation which the organisation may deliver.
Employees sometimes end up trapped [CITATION Est10 \l 17417 ]; [CITATION Ama08 \l
17417 ], to be operationally efficient, seeking to fulfil organisational
demands[ CITATION Jag00 \l 17417 ]. The resulting challenge may have detrimental
consequences, including occupational burnout and lowered work productivity
[CITATION Arn04 \l 17417 ] . Therefore, it is a critical challenge for service organisations
to consider how individual workers cope with this strain in industry[ CITATION Ban11 \l
17417 ].

Organisation deception literature accepts the recurrent need to follow

seemingly contradictory targets, such as productivity, [ CITATION Adl07 \l 1033 ], it
means that workers can add to corporate success if companies can exploit their
deceptive abilities. Because organisations have a different culture, the organisation
should strive to eliminate challenges from its organisation that allow the productivity
of workers to be lost. Factors especially in manufacturing companies such as not
investing in automation, not implementing production layout improvement, not
implementing process improvement and not implementing lean operations will lead to
low employee productivity[CITATION Ste96 \l 17417 ].

3.11.1.2 Automation

Automation is defined as the creation and application of technology to monitor

and control the production and delivery of products and services [ CITATION Int \l 17417
]. Machineries are mostly used in production in order to replicate manual task being
carried on by human. Machineries can operate faster and reduce human error.
Automation involves a very broad range of technologies including robotics and expert
systems, telemetry and communications, electro-optics, cyber security, process
measurement and control, sensors, wireless applications, systems integration, test
measurement, and many more [ CITATION Int \l 17417 ]. In this research study, we
mainly use machineries and sensors to replicate manual task being carried on by
human in order to reduce manpower and improve the overall production efficiency.
 In an assembly line, automation is a vital component to reach the employees’
productivity. We can see that in manufacturing assembly lines the raw products are
moving into a sequence of stations which in every station’s assembly tasks are being
performed sequentially for a specific man hours [CITATION Bin18 \l 17417 ]. In previous
studies shows on the Robotic Automation Line Balancing Problem (RALBP) for the
first time where the problem was formulated in depth as apportioning equivalent
numbers of function to the on-line facilities while allocating per each workstation the
most effective robot type from the given collection of robots usable, and their goal
was to reduce the number of workstations over a given cycle period that [CITATION
Jos03 \l 17417 ]. In addition, the topic was enlarged, and a branch-bound algorithm was
established [CITATION Gre02 \l 17417 ] to solve the problem. A threshold value was
granted since the station was not yet allocated the number of minimum time possible
for assignments. Therefore, the algorithm needs a large amount of computation time
and storage, and it's only effective for low problems, even though heuristic rules are
implemented. Where many equipment alternatives exist, with the goal of minimising
equipment costs, the problem has been solved. To overcome reasonable problems, an
accurate branch-and-bound algorithm has been developed, whereas a heuristic
procedure is practised to deal with major issues [CITATION Jos00 \l 17417 ]. A beam
search algorithm similar to Tabu search (TS) was presented to overcome an
Automation Line Balancing Problem (ALBP) inside a U-shaped assembly line in
order to minimise the overall cost of labour and the total estimated cost of
incompletion[ CITATION EEr05 \l 17417 ]. A collection of heuristic algorithms applied to
ALBP has been used for robotic production lines, but only minimal heuristic
algorithms have been applied to RALBPs[CITATION Bin18 \l 17417 ].

In the subsequent paragraph, the published research on RALBP introduces a heuristic

method for the design of a scalable robotic production line manufacturing a
community of general goods [CITATION Moj14 \l 17417 ]. To decide the volume and
form of robots with each production line, an integer-programming model with such a
design modification step has been used. A mathematical model and a cutting plane
algorithm were designed to minimise the total number of robot cells, with additional
limitations such as space and joint allocation limitations [CITATION Zey16 \l 17417 ].
They found the question of determining not only roles on a robotic production line,
but also components and instruments. The model noted above, however, did not
provide the distribution of robots with various output capabilities.

3.11.1.3 Process Improvement

Process improvement includes various improvement activities to improve the

overall production process. In this research study, we focus on reducing the cycle time
of a process through line balancing study. Line balancing is the process to minimize
imbalance between workers while meeting the required output from the line [ CITATION
Jay201 \l 17417 ]. Each sequence of tasks and their cycle time needs to be first
determined. Balancing the line then requires each tasks or workstation cycle time to be
equal or as close as possible to each other [ CITATION Jay201 \l 17417 ].
The key objectives which are to reduce waste to increase organisation
competitiveness is through process improvement where it can increase productivity
and reduce production cost [ CITATION Pac20 \l 1033 ]. Processes improvements are
essential to the performance and ability of each organisation to successfully
implement the business practice and to operate profitably and growth of the
organisation. In addition, methods are the key tool through which businesses provide
the industry with value. The shifting business situation is causing an increasing
interest in improving organisational business processes [CITATION CRa01 \l 17417 ].
Improvement of business processes should be among the biggest priorities of all those
organisations that want to be competitive in the market because the requirements to
keep up with the demand from the market and in the same time to achieve maximum
productivity are very sophisticated and precise. Systematic and innovative should be
the method of fulfilling their needs. To do this, business processes improvements need
frequent improvements. To ensure successful business process improvement, it is
important to consider how systems function, the relationships between them and how
they bring value to manufacturing goods or providing services.
Improving the business process is a systematic approach to improving
productivity that relies on focused architecture and diligent implementation of the
end-to-end business process of an organisation [ CITATION MHa03 \l 17417 ] . It can also
be considered as a dynamic, information-intensive, collaborative process consisting of
a series of organised, contextualised processes for knowledge management [CITATION
Rav09 \l 17417 ], as a gradual bottom-up improvement of current working boundary
processes [CITATION Tho92 \l 17417 ].
The aims of improving business processes are: better productivity, which
ensures that results are accomplished and targets are achieved, improved productivity,
greater flexibility, lowered running time and reduced costs such as service, loss,
prevention or evaluation costs [CITATION Dan17 \l 17417 ], improved morale and
productivity for staff and increased satisfaction for consumers [CITATION Rad \l 1033 ].
While process management will usually produce value in all aspects of the
organisation, it is crucial to concentrate on areas that have the greatest output effects
(e.g., cost, quality, service).
Improvement of business processes was the subject of several studies
[CITATION Dan17 \l 17417 ]. There are several published studies on the effectiveness of
organisational process improvement and the main success factors [CITATION Mar11 \l
17417 ]. These considerations are effective management and visible management
support, an efficient engagement plan, adequate training and development, funding
and time for changes to take place, and external experience and support [ CITATION Rad
\l 1033 ]. Similar main success factors for the outcome of business process change
were also identified [CITATION Sam08 \l 17417 ]. These considerations are the
engagement and absolute involvement of top management, the value of exchanging
and transmitting knowledge, the productive use of information technologies, the focus
on transferability of knowledge, and the wise choice of the method to be strengthened.

3.11.1.4 Production Layout Improvement

Production layout improvement that will be carried out in this research is the
work cell layout improvement. Work cells are group of people or machines put
together to make a single product or a group of related product [ CITATION Jay201 \l
17417 ]. Advantages of work cells include reduced work in process inventory, less
floor space requirement, reduced manpower (which is our main objective) and
increased in equipment or machinery utilization rate. Improving the layout of these
work cells will further improve the efficiency and productivity.
Production layout in the packaging plant is an integral part of the supply chain.
The primary functions of production layout are; to control the lateness of production
flow, integrating of raw materials received from suppliers and products customization
based on the needs from the clients [ CITATION Hor16 \l 1033 ]

Based on research done, each station that produces only one product in one
cycle period, in which the cycle time will be the time interval between two
consecutive outputs, in a conveyor system for mass processing. The amounts of
required service and loading times in the conveyor system are supposed to be identical
between stations, the objects are sequentially handled between stations, and that there
are no items within neighbouring stations[CITATION Koi99 \l 17417 ].

Above that the definition, that is referred as the single-unit production and
conveyance (ikko-nagashi, in Japanese), is applied in the just-in-time (JIT)
manufacturing process to a manufacturing line without conveyors which produces
different kinds of fairly tiny parts. A U-shaped configuration of multi-function staff
has been used to do this at a low manufacturing rate [CITATION Koi99 \l 17417 ]. Study
on U-type using optimization systems such as Mixed-integer linear programming
(MILP) [CITATION Yak07 \l 17417 ]; [CITATION Ali15 \l 17417 ], branch and bound
algorithm [CITATION Dil \l 17417 ], goal programming [CITATION Had06 \l 17417 ];
[CITATION Bil08 \l 17417 ] and integer programming [ CITATION Kar15 \l 17417 ] has been
successful.

The adaptability of the u-type assembly line has been addressed in just-in-time
environments [ CITATION Kar15 \l 17417 ], [CITATION Ned13 \l 17417 ]. In the U-type
assembly line research, different combinations in assignment and set-up times also can
be identified. In that same research two setup methods, called forward and backward
set-up, are considered to optimise the output rate of the U-type assembly line with
sequence-dependent set-up times [CITATION Mur17 \l 17417 ]. The forward set-up takes
place when two neighbouring functions are performed on the very same item by an
employee. On the condition that an employee shifts to a separate work piece to
conduct assembly, the backward set-up is necessary. In other languages, the backward
set-up is caused by a new loop or transition between forward and backward parts.
Moreover, resource-dependent work times has been controlled [CITATION
Placeholder2 \l 17417 ]. By modifying the configuration from just a straight line to a U-
type line during resource-dependent task times, operating costs could be reduced
[ CITATION Kar15 \l 1033 ].
3.11.1.5 Lean Operation

Lean operation is the process of improving productivity through reducing the

seven wastes of transportation, inventory, motion, waiting, overproduction, over
processing and defects [ CITATION Jay201 \l 17417 ]. Transportation is the movement of
materials or workers between work cells. Inventory is the unnecessary raw materials,
work-in-process (WIP), finished goods and excess operating supplies. Motion is the
movement of equipment or people that does not add value. Waiting is the idle time of
workers, equipment or machineries that add no value to the production.
Overproduction is the process of producing more than the customer orders. Over
processing is the work performed on the product that adds no value. Defects are
rejects that is not acceptable to the customers.
The key objectives which to reduce waste to increase organisation
competitiveness is through process improvement where can increase productivity and
reduce production cost the principle of lean operation is a holistic approach to quality
improvement of production based on the idea of cost reduction in the production
process. [ CITATION Sad93 \l 17417 ]. Many of the lean operation research on the issue
of lean operation have concentrated on the interaction between lean implementation as
well as other management strategies in recent years. Lean operation is also a
multidimensional approach that includes a wide range of operational and management
activities, including just-in-time (JIT) process, quality improvement/TQM, total
productive maintenance (TPM), workforce advancement, advanced manufacturing
technologies, quantitative process monitoring, engagement of customers and staff,
supplier relationship management and integrated management system [ CITATION Sad93
\l 1033 ].

First, as per on (2006), to recognize how to effectively execute Lean operation,

it is important to define the critical success factors. Quite few research studies have
addressed the critical success factor for introducing Lean operation such as
management engagement, social improvement, organisation development, education
and training, corporate strategy, customer focus (CF), human capital management,
supplier relationship management process improvement skill, project scope and
priority, and understanding process, strategies, and define-measure-analyse-control
(DMAIC) practice [ CITATION Nur15 \l 17417 ].
 In the thesis, it shows the established lean operation productivity frameworks
for an organization in China. This was developed using the lean operation
critical success factors, which were then used to calculate the productivity of the
implementation of lean operation [ CITATION Jai14 \l 17417 ]. That eight assessed the
success of lean operation that was used in the organisation to be put in place;
leadership, administration of people, management of systems, empirical management,
technique and device and implementation, quality development, customer focus and
outcome. It is then based on its four organised and specific components, including
such parallel-meso metric, the concept of the lean operation was proposed; leadership
participation and strategic project development, enhancement specialist, systematic
methods, and success metric to accomplish strategic aim, minimise variance and
enhance performance [ CITATION Rog08 \l 17417 ] . Recently, therefore the research
look into how the three variables of lean operation traditionally work, namely: Six
Sigma Role Structured Improvement Procedures (SIPs) and lean operation metrics,
combined seven conventional quality management practises in 226 US manufacturing
plants to the impact quality management and company performance [ CITATION
Rog08 \l 17417 ]. The three lean operation practises are different from conventional
quality management practises which support the traditional performance improvement
practises of quality management. The findings showed that the lean operation factor
led to a higher increase in productivity.

2.12 Hypothesis Development

H1: There is a significant positive relationship between Automation and the

employee’s productivity at PT’s packaging department.
H2: There is a significant positive relationship between Layout changes and
the employee’s productivity at PT’s packaging department.
H3: There is a significant positive relationship between Process Improvement
and the employee’s productivity at PT’s packaging department.
H4: There is a significant positive relationship between lean operation and the
employee’s productivity at PT’s packaging department.
Theoretical Framework and Academic Construct

Figure 3: Research Theoretical Framework

Figure 4: Academic Construct

2.13 Strategic Tools

Two strategic methods, PEST Analysis and SWOT Analysis, are used in this
report. These two strategic instruments demonstrate a strong view of the challenges of
PT and help to create strategic recommendations to deal with the company's problems.

3.13.1.1 PEST Analysis

Economic
Political
- Economic trends
- Government policy
- Industry growth
- Competition regulation
- Seasonal factors
- Labour and Environmental laws
- Labour costs

Social Technology
- Demographic trends - Technological trends
- Education standards - Innovation and breakthrough
- Living standards - IT infrastructure
- Gender roles - Automation

Figure 5: PEST Analysis

As ways to compile the large amount of potential challenges that could impact
an organization, several risk assessments have been created. One of them would be the
PEST analysis, which really is simply a system that classifies environmental factors as
political, economic, social and technological factors. Two new variables, legal and
environmental, can often be applied to render a PESTEL (Political, Economic, Social,
Technological, Environmental, and Legal) analysis, so the others can quickly
transcend these concepts. The analysis examines the effect on the company of both of
these variables and their relationship with each other. The findings will then be used
when developing business and strategic plans to seize opportunities and making risk
assessment for risks [ CITATION Bya91 \l 17417 ]; [ CITATION LCo00 \l 17417 ].

Concluded that PEST analysis is a valuable strategic instrument for

recognizing business rise or downturn, organization role, organizational capacity and
strategy [ CITATION Kot98 \l 17417 ] . In addition to SWOT (Strengths, Weaknesses,
Opportunities, and Threats) and Porter's Five Forces models, PEST are a tool for
evaluating a scenario and can be used for businesses to review strategic directions,
including campaign proposals. For strategic and business plan, marketing planning,
organisation and product development and analytical reports, the use of PEST analysis
may be beneficial. PEST also guarantees that the productivity of the enterprise is
positively associated with the strong forces of change impacting the corporate world
[ CITATION Por85 \l 17417 ] . PEST is helpful when an organisation chooses to venture
into new market segment countries for its corporate activities. In this situation, the use
of PEST allows us to break away from unconscious prejudices and helps to respond to
the realities of the current world rapidly changing.

PEST is often used before SWOT, not necessarily vice versa, and PEST
certainly helps to recognise SWOT variables. There is also a similarity between PEST
and SWOT, in which both would tend to have identical factors. Such that, PEST and
SWOT are definitely two separate points of view: from the point of view of a single
idea or a firm, PEST analysis analyses business, including competitors; SWOT is an
evaluation of an industry or a plan, whether own or a competitor's. Strategic
preparation is not a detailed scientific knowledge method is compulsory is a matter of
realistic preference as to what helps to define and clarify the challenges better
[ CITATION Por85 \l 1033 ]

3.13.1.2 SWOT Analysis

 Figure 6: SWOT Analysis

SWOT Analysis is a powerful structured method which is used to assess an

organization, strategy, mission or business growth [ CITATION Eme17 \l 17417 ] . This is
also a perfectly matched technique that helps organizations identify business-related
strengths, weaknesses, opportunities and threats and establish strategic alternatives
inside the organization. Two analytical environments, i.e. internal and
external analysis, splits the SWOT analysis. External analysis enables the organization
to develop its competitive environment, while internal analysis helps to determine the
organization's core value [ CITATION Tan15 \l 17417 ].

SWOT Analysis helps the management team to address business challenges

and the economic expansion of strategies. It is all about acknowledging the
opportunities and responsibilities when looking at the everyday events of the past and
the current situation [ CITATION SGu17 \l 17417 ]. The organization's current business
model, objectives, vision and purpose, along with internally and externally study
specifics, provide a foundation to establish and analyse feasible alternative solutions.
It is also the area where pairing key incorporates the organization's internal resources
and capabilities and the external threats and opportunities. The organization must have
a deeper understanding of both the environment of the organization because it
influences the framework, organising and decision-making of all its strategies
[ CITATION Kua07 \l 17417 ]; [ CITATION Dij12 \l 17417 ].

2.14 Summary

In this chapter, the research background, concept and the definition of key
concepts are discussed and elaborated further including the component of the research
area. Researchers also listed the strategic tools that will be used in this research which
is SWOT analysis and PEST analysis as well as the academic construct. All the tools
mentioned will be a source of aid that will assist in analysing all the variables in this
research.
 CHAPTER 3
RESEARCH METHODOLOGY

2.1 Introduction

The purpose of this research is to determine the strength, weaknesses, opportunities

and threats of the packaging department; to determine the highest contributing factor towards
the improved productivity of the department; and to determine the most cost effective
improvement actions taken for the efficiency improvement through survey questionnaire. The
survey will be conducted on employees working at the production line of the packaging
department. The research is a cross-sectional research where the survey questions will only
be conducted once.
2.15 Sampling Size

The population of the study will be the production workers of the packaging
department. It comprises 50 production workers. The census approach will be used in this
research where the feedback of the research will be from the production workers of the
department. According Krejcie and Morgan (1970), if the population is 50, then the minimum
sample size is 44.
2.16 Data Sources

The data obtained in this research is based on primary data. The primary sources were
obtained by questionnaires circulated in the packaging department at the main production
plant of PT, located at Kepong, Wilayah Persekutuan Kuala Lumpur. In addition, the
researchers held an online video conference session with Mr. Nafaiz Rosli from PT’s
packaging department, with an active initiative for research to collect in-depth information
regarding the company and the challenges that arose. In the meantime, secondary data is
obtained from PT’s Enterprise resource planning (ERP) system, management review meeting
minutes and employee training records.

2.17 Instrument for Research

As the primary instruments in this analysis, a series of questionnaires was created. The
questionnaire was circulated to the workers employed at PT's packaging department. Due to
the availability of researchers to respond to any questions from the respondents, it is easier to
send the questionnaires by hand to the respondents and offer clearer clarification to ensure
that the respondents have a better grasp of what is expected and can provide better answers.
The questionnaire survey was used as a tool for obtaining data and information from
respondents for this study, and each question in the questionnaire was obtained from different
publications. There are three sections of the questionnaire which are Section A (Demographic
Profile), Section B (Independent Variables) and Section C (Independent Variable). In
conjunction, this analysis contains three types of scale measures, such as nominal scale,
ordinal scale and interval scale.
The simplest measuring standards are established by nominal scales, since it is a scale in
which numbers only function as symbols or marks to distinguish and classify objects with a
strict one-to-one correspondence between numbers and objects [ CITATION Mal07 \l 17417 ].
Each of the nominal scale explanations in Section A of the questionnaire is used in the
demographic profile of respondents including such "Gender"- Male or Female.
The ordinal scale is a rating scale in which subject numbers are assigned to represent the
relative degree to which those attributes are represented [ CITATION Mal07 \l 1033 ]. The
primary feature of the ordinal scale is that each of the groups has a rational or structured
relationship. It requires degrees of difference to be measured, but not the exact sum of
difference. One instance of the ordinal scale used in Section A is the assessment of age and
income, such as "monthly salary"-<RM 800, RM801-RM1200, RM1210-RM1600, RM1601-
RM2000, and >RM2001.
Interval scale translates as a scale under which items including the numerically
equivalent intervals on the scale describing equal distances in the features being evaluated are
rated by numbers [ CITATION Mal07 \l 1033 ] . In Section B and C of the questionnaire, 5-point
Likert scales are applied. In context of independent variables (automation, production layout
improvement, process improvement, implementing lean operation and the usage of
information technology), respondents are given five substitutions which are 1 - “Strongly
Disagree”, 2 - “Disagree”, 3 - “Neutral”, 4 - “Agree” and 5 - “Strongly Agree” to determine
the level of agreement and disagreement on independent variables and dependent variable
(employees productivity).
2.18 Operationalization of Variables

5-Point Likert Scale

 (1) (2) (3) (4) (5)
Strongly Disagree Neutral Agree Strongly Agree
Disagree

3.5.1 Section B

Table 1

Overview of questionnaire items of improvement actions

Independent Item/Code Book Sources Instrument

Variables Scale
Automation AU1: Did the automation actions [ CITATION Bin18 \l 5-Point
implemented able to reduce work cycle 17417 ] Likert Scale
time?

AU2: Did the automation actions

implemented able to reduce idle time?

AU3: Did the automation actions

implemented able to reduce work in
process at workstations?

AU4: Did the automation actions

implemented able to balanced
workstations?

AU5: Did the automation actions

implemented able to reduce changeover
time?

Production PL1: Did the layout improvement actions [ CITATION Kar15 \l 5-Point
Layout implemented able to remove items 17417 ] Likert Scale
Improvement blocking pathway?
[ CITATION Soo20 \l
PL2: Did the layout improvement actions 17417 ]
implemented able to free up space
[ CITATION Jun20 \l
acquired? 17417 ]
PL3: Did the layout improvement actions
implemented able to reduce movement or
motion?

PL4: Did the layout improvement actions

implemented able to shorten raw materials
location?

PL5: Did the layout improvement actions

implemented able to free up space
 adequate for raw materials and finished
goods?

Process PI1: Did the time motion study [ CITATION Jun20 \l 5-Point
Improvement implemented able to determine bottleneck? 17417 ] Likert Scale

PI2: Did the workforce balancing able to

ease workflow?

PI3: Did the operator variability reduction

able to improve output?

PI4: Did the work elements or task

simplification able to increase output?

PI5: Did the work inventory reduction able

to ease production?

Lean LO1: Is lean culture being adopted at your [ CITATION Sah20 \l 5-Point
Operation workplace? 17417 ] Likert Scale

LO2: Is 5S being sustained at your

workplace?

LO3: Is Kaizen (Continuous improvement)

being implemented at your workplace?

LO4: Is JIT for inventory management

being implemented at your workplace?

LO5: Is there actions taken to reduce the 7

wastes?

3.5.2 Section C

Table 2

Overview of questionnaire items of employee productivity

Employee EP1: Are your time spent actively during [ CITATION Sha14 \l 5-Point
Productivity work? 17417 ] Likert Scale

EP2: Are all resources used at optimum [ CITATION Arn04 \l

level? 17417 ]

EP3: Are delays and idle time eliminated [ CITATION Moh92 \l

at your workplace? 17417 ]
 EP4: Are your mental health at optimum
level?

EP5: Are you well trained on your

jobscope?

2.19 Fieldwork and Data Collection Method

In this study, researchers will use primary data collection. According to [ CITATION
Vic17 \l 1033 ], primary data is an original and unique data, which is directly collected by the
researcher from a source such as observations, surveys, questionnaires, case studies and
interviews according to his requirements. Therefore, this study targeted 50 production
workers of the packaging department.

2.20 Data Analysis

The collected data will be useful information for this research and only a full and
detailed answered questionnaire will be evaluated from the 50 copies of the distributed
questionnaire. All the data gathered will be then analysed using the Statistical Package of
Science, (SPSS) version 27.0. The statistical analyses that will be used to analyse the data are
the Descriptive analysis, Reliability analysis, Regression analysis and Correlation analysis.

3.20.1.1 Descriptive Analysis

Descriptive analysis is often used to define and summarise the main characteristics of
questionnaire results [ CITATION Aak07 \l 1033 ]. It makes an interpretation of simple data in a
manner that defines fundamental characteristics including such frequency distribution,
measures of central tendencies (mean, median, and mode) and measures of dispersion
(standard deviation range, and coefficient of variance). The aim of the frequency distribution
will be to display values including such numbers and percentages of a specific categorical
variable for various groups. Just one categorical component is included in the calculation,
which is ordinal or nominal scale [ CITATION Wil03 \l 1033 ].
Frequencies are usually collected from nominal variables like age, gender, etc,
whereas monthly income levels, intensity of visits to fast food restaurants, and so on are
figures derived from ordinary variables. For all the values associated with that element, a
frequency division for a variable will then create a frequency table, percentage and total
percentages [ CITATION Nar06 \l 1033 ].
In conjunction, the fundamental pattern is used to calculate the typical value around
which other statistics are obtained [ CITATION Sim57 \l 1033 ]. A calculation of central trend is
an average in layman's words, with which it is a single number of values that can be found
common in a data set overall. The central tendency calculation consists of mean, median,
mode.

3.20.1.2 Reliability Test

Accuracy and stability checking. Defines a measure's reliability. Consistency

illustrates how well the objects that quantify a notion hang together in the same set. The
effect of the reliability test coefficient is recognized as the Alpha of Cronbach, where it
indicates how the objects are positively correlated to each other in a group [ CITATION Sek16 \l
1033 ] When the Cronbach Alpha is close to 1., the reliability coefficient analysis revealed
that all questions in the research questionnaire are accurate. The reliability coefficient
analysis revealed that all questions in the study questionnaire are consistent.
The meaning of the Alpha of the Cronbach reflects the intrinsic stability of how
closely a collection of objects as a category are related. Below is the thumb rule table for the
Alpha Coefficient Size of Cronbach [ CITATION Hai07 \l 1033 ].

Table 3

Rule of thumb interpreting alpha (⍺) value

Alpha Coefficient Range Strength of Association
⍺ ≥ 0.9 Excellent
0.8 ≤ ⍺ < 0.9 Very Good
0.7 ≤ ⍺ < 0.8 Good
0.6 ≤ ⍺ < 0.7 Moderate
⍺ < 0.6 Poor
Source: [ CITATION Hai10 \l 1033 ]
3.20.1.3 Regression Analysis

In evaluating the data, regression analysis is also used. This analysis is widely used in
cases in which one independent variable is believed to influence one dependent variable
[ CITATION Sek16 \l 1033 ]. In its simplest form, regression analysis helps market analysts to
evaluate interactions between an independent variable and a dependent variable. In
applications, the dependent variable is typically the effect that researchers think for (e.g.,
sales), while the independent variables are the resources that researchers would obtain such
effects with (e.g., pricing or advertising). Analysis of regression can provide insights that few
other approaches can.  The major advantages of using regression analysis are that it can; 1)
say that it can; If independent variables have an essential interaction with a dependent
variable, 2) demonstrate the relative intensity of the influence of multiple independent
variables on a dependent variable, and 3) make estimates, for example, using the regression
model, we have calculated the data of costs, purchases, and promotional activities, the
regression analysis outcome would provide a reliable response to what will happen when
prices are about to rise by 5 percent and promotional activities are about to rise by 10 percent.
The exact responses would then be useful for administrators to make choices by preparation
and tactics [ CITATION Moo13 \l 1033 ]. Therefore, learning about the impacts on dependent
variables of independent variables will aid market analysts in several different ways.
3.20.1.4 Correlation Analysis

The Pearson correlation indicates the course, intensity and importance of the

correlation coefficient among all variables calculated at the level of an interval or ratio
[ CITATION Sek16 \l 1033 ]. This research used the Pearson correlation test in which the
relationship between two variables is generally mainly checked and the correlation
coefficient is a calculation of the strength of the linear relationship between two variables
[ CITATION Sek16 \l 1033 ]. The connection could then vary from - 1.0 to +1.0.0. There is a
positive association when r=1 is, as per [ CITATION Sek16 \l 1033 ] , which implies a perfect
positive linear relationship between the two variables. Besides, it shows a negative
association when r=-1.

Table 4

Rule of thumb interpreting correlation and coefficient

 Correlation Coefficient Strength of Relationship
. 90 to 1.00 (-. 90 to -1.00) Very high positive (negative) correlation
. 70 to.90 (-. 70 to-. 90) High positive (negative) correlation
. 50 to.70 (-. 50 to -. 70) Moderate positive (negative) correlation
. 30 to.50 (-. 30 to. 50) Low positive (negative) correlation
. 00 to.30 (. 00 to -. 30) Little if any correlation
Sources [ CITATION Hin03 \l 1033 ]
3.20.1.5 Application of Strategic Tools

In this research, researchers will use the SWOT analysis to identify and analyse PT
strength, weakness, opportunities and threat in order to address inadequacy, minimize risks
and to improve for a better success. According to [ CITATION Tan15 \l 1033 ]
the internal strengths and weaknesses and the external opportunities and risks in company can
be analysed by a SWOT review.
Strength Weakness

● Unique Selling Points ● Invaluable elements

● Better Characteristics than ● Competitor Better Specialization

Competitor
● Weaknesses perceive by
● Competitive Edges competitor and customers;
efficiency

Opportunities Threat

● Favourable changes in political, ● Unfavourable changes in political,

economic, social-cultural or economic, social-cultural or
technology (PEST) technology (PEST)

● Gaps in the market

● New innovation

Figure 7: SWOT Analysis

Besides that, researchers will also apply the cause and effect analysis for
brainstorming the best solution of the several causes which in our study is the improvement
actions taken. The point that will be stressed out from the improvement actions taken is the
cost of implementation.